When the offer on your home is accepted, you’ll start the process of securing the mortgage for your home. Lenders will give you the option to lock or float your mortgage rate prior to closing (which typically happens 30 days after the offer is accepted).
“Locking” your mortgage means that you and your lender have agreed on an interest rate and price for your home loan. Once your loan is locked, that’s the rate and price you get, regardless of what happens in the financial markets. If rates go up, you’re protected; but if rates go down, you won’t benefit either — you close your loan at the rate you’ve locked and you can’t change it. Locks have expiration dates ranging from 30 to 60 days or more, and the longer your lock period, the more it costs. If you don’t close your loan on time, you could end up paying a higher interest rate.
Every day, LendingTree posts our recommendation (below) on whether you should lock or float your rate, so make sure to check back here prior to making your decision.
Mortgage rates might edge down today, or maybe hold steady. However, that forecast is based on early market trends, and those frequently change speed or direction during the day. So a sharper fall or even a rise remain possible. Still, if we were currently buying a home, we would float our rate now, and revisit that decision tomorrow morning. To discover why you might prefer to lock, read on.
Our prediction could be undermined in coming hours by any economic, political, and geopolitical news that might affect the American and global economies, including:
• President Trump’s remarks last night in Phoenix, AZ, concerning a possible government shutdown later this year and the prospect of pulling out of the North American Free Trade Agreement. Markets see both those as having the potential to harm the economy.
• The first reading of the composite purchasing managers’ index, which is a survey of purchasing professionals. This morning’s figures were better than expected overall: good for the services sector, but not so positive for manufacturing.
• New home sales – These were significantly worse than had been forecast.
• Investors may continue to jockey for position ahead of tomorrow’s annual Economic Policy Symposium in Jackson Hole, Wyoming, which is hosted by the Kansas City Federal Reserve Bank.
Average rates for 30-year fixed-rate mortgages inched up yesterday for the first time in a week. However, they remain adjacent to the 2017 low set last Friday. What happens next will depend on whether relevant news becomes more or less positive in coming hours and days. Absent other factors, good news tends to push mortgage rates up, while bad news usually pulls them down. However, that simple correlation is far from rigid, at least over the short term.
Some experts might urge you to lock your rate the next time an appreciable rise looks likely, particularly if you need to lock anyway within the next few weeks. Others might suggest you continue to float, providing you have time to ride out the coming (near-inevitable) ups and downs. But neither group has a crystal ball and there remains a real possibility of volatility. So, either way, you are taking a chance. Only you can decide on the level of risk with which you are comfortable.
LendingTree makes getting a mortgage easy! Below are the steps to take to make your mortgage process as seamless as possible:
Mortgage rates can vary a lot between lenders on any given day. So, if you only get one mortgage quote, you won’t have any idea if there’s a better deal out there. That’s why the best way to get a mortgage rate it to request quotes from multiple lenders and compare interest rates, loan terms and closing costs. It puts you on in charge and keeps the banks competing to get you the best rate possible. Remember, even .1 percent can amount to thousands of dollars over the course of a loan. Make sure you shop around!
